You may think you have all the bases covered with your current retirement plan. Then again, if you have one or more of these blind spots, it can derail your financial security when you retire.
1. Estate Planning
Surveys show only 33% of Americans have a comprehensive estate plan. That means over 60% will be leaving their assets in the hands of probate court and the laws of their state when they die. What’s the top reason why most people put off estate planning? They say they haven’t had the time. But it’s likely because no one enjoys thinking about their own death. However, it’s important to remember an estate plan also protects you when you’re incapacitated and unable to make your own decisions.
2. Long Term Care (LTC) Planning
According to LongTermCare.gov, a person turning 65 today has a near 70% chance of needing some type of long-term care in the future. Yet, the National Council on Aging reports 80% of adults over age 60 cannot afford the out-of-pocket cost of non-medical long-term care. Meanwhile, the average private room in a nursing home runs over $10,000 per month. Without LTC insurance, the out-of-pocket costs can drain your nest egg.
3. TSP Withdrawal Strategy
Unless you plan on leaving your Thrift Savings Plan (TSP) to your loved one, it’s important to have a withdrawal strategy designed to make your money last the rest of your life. From the 4% rule or life expectancy strategy, to purchasing an annuity that provides a lifetime source of income, a TSP withdrawal strategy helps ensure your future financial security.
“If you haven’t updated your retirement plan to take advantage of these changes, the time is now.”
4. RMD Strategy
Thanks to the SECURE Act 2.0, changes to Required Minimum Distributions (RMDs) went into effect on January 1, 2023. For those born after December 31, 1950, the age for RMDs has been raised to 73. Starting on January 1, 2024, Roth TSP accounts will no longer be subject to RMDs. Update your retirement plan to take advantage of these changes.
5. Tax Planning Strategy
Some call it the retirement “Tax Bomb” because far too many federal employees underestimate how much their benefits can be taxed as regular income:
- As much 90% to 98% of your FERS/CSRS annuity
- 100% of your TSP Distributions
- Up to 85% of your Social Security income exceeding IRS limits
This is why tax planning is a crucial component of your overall federal retirement plan. Connect with an FRC® trained advisor who fully understands your federal benefits and can help close these dangerous gaps.
